Indonesia: Strengthening disaster financing policies

By Adelia Pratiwi and Dwinanda Ardhi Swasono

Besides being naturally prone to disasters, based on the World Risk Index, Indonesia is also among the riskiest places in the world due to a lack of coping and adaptive capacities. An important resilience factor to improve is financing effectiveness. 

Every year, the government spends around Rp 4 trillion (about US$285.70 million) on programs to improve disaster resilience. This amount, even if added with support from international communities, still could not cover the actual economic loss of extreme events like Aceh’s earthquake and tsunami of December 2004. As such capacity is limited by fiscal regulation, Indonesia should work toward improving the current financing capacity.

This requires a thorough examination of the institutional and instrument readiness Indonesia already has with its framework for disaster mitigation, Law No. 24/2007.  

[...]

The law, however, does not specify disaster risk financing strategies. It only states that we have funds through the central and local government and National Disaster Mitigation Agency (BNPB) budgets.